Outlook: Energies are lower to start the week with demand concerns and excess supply the key driver. Nearby WTI has dipped back into the $72 range and $72.16 will be critical support, representing the low from mid-November. A breach of this level would leave crude prices at their lowest level since June. A few bullish drivers developed over the weekend, but none have been compelling enough to shift the bearish bias. It’s a heavy slate for macroeconomic data this week which may take control in the absence of any major headlines.
Crude
- The US Treasury has sanctioned three more firms for violating the G7 Russian oil price cap. 8 total vessels and firms have now been hit with fresh sanctions.
- The Pentagon reported a US Navy warship and multiple commercial ships were under attack over the weekend in the Red Sea.
- The head of the United Nations called for a complete eradication of fossil fuels at the COP28 conference over the weekend.
- Saudi Arabia’s crude exports in November rose to their highest level since June at 6.4 mbpd.
- The US DOE said they will buy back as much oil as possible to take advantage of lower oil prices.
- Baker Hughes reported US oil rig counts rose by 5 last week to 505.
- November manufacturing data for countries undergoing economic tightening came in softer than expected last on Friday.
- As of 9:02 am CST: Brent crude oil down $0.82 to $78.05, US dollar index up $0.313 to 103.581 while the nearby e-mini S&P 500 futures contract is down 33.25 to 4567.00.
Diesel
- HO managed money traders net bought 3,637 and are net long 36,175 contracts.
- Smaller backwardation in the prompt spread and soft regional basis may be advantageous for filling storage and hedging until delivery.
Gasoline
- RBOB managed money traders net bought 1,949 contracts and are net long 66,329 contracts.
- Gasoline demand has remained soft despite significant declines in pump prices.
Propane
- Conway is trading at .6675 while Belvieu is trading at .7275.
- Conway Swap Oct24-Mar25 strip trading ~.7250.
- Propane saw another strong move higher on Friday despite the weakness in crude.
- Seasonal pressure may be limiting downside for propane.
Natural Gas
- Overnight weather runs removed 5 HDDs through the two-week forecast.
- Prompt NG closed down 18 cents last week, marking 4 consecutive weeks of decline.
- Baker Hughes reported nat gas rigs fell by 1 to 116 last week.
Continuous Daily NG: Despite a weekend uptick in HDDs, soft demand continues to pressure natural gas prices. Look for the 200-day MA to act as a downside target this week.
